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Innovation technologies to beat external competitors

Telecomunication companies foster net research spending

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Huawei Technologies, the mainland´s largest maker of networking equipment, is ready to outspend Ericsson of Sweden in research and development in a race to win over clients not just with cheaper products.

After investing about 30 billion yuan (HK$37.6 billion) last year, Huawei was boosting its research budget this year to improve mobile and fixed-network performance as well as audio and video transmissions, said Li Yingtao, its head of research and development.

Huwai is looking for partners, industrial and academic, to help achieve new findings, Li said. The company yesterday said it’s discussing with the Imperial College London about sharing a lab to study technologies that use mathematics to crunch large amounts of data. The privately held company is seeking to work more closely with carriers to jointly develop products from radio-access networks to miniaturised antennae.

"The bottom line when you talk to customers about building a network is that they will ask: ´Can you do it or not?´" Li said. "That ability depends mostly on innovation capacity. That´s why we will continue to increase our investments."

The comments underscore the mainland´s latest efforts to move upscale from low-cost manufacturing. While it still ranks low -35th – on the list of the most innovative countries, China is at the forefront of emerging economies measured by growth in patent filings and is among the highest-rated for research and development spending, according to a World Intellectual Property Organisation report.

On the other hand, net research spending in European technology companies grew last year at the slowest pace in three years, data shows. However they still are trying to implement strong efforts in innovation technologies to beat external competitors such as Huwai.

With 21,400 research employees, Ericsson´s research spending last year was almost the same size as Huawei´s and accounted for 14.4 per cent of sales. The ratio for Huawei, where almost half of its 150,000-strong workforce is in research, was 13.7 per cent.

Alcatel-Lucent SA, the smaller French supplier with a market value of $4.1 billion, has a 2013 R&D budget of more than 2 billion euros ($2.6 billion).

Earlier this week, Nokia agreed to buy Siemens AG’s share in their six-year venture for 1.7 billion euros. Nokia Siemens Networks, which reported 2012 revenue of 13.8 billion euros, is evaluating a sale of manufacturing plants in Finland, India and China and to outsource production, said a person familiar with the matter.

Nokia Siemens Networks topped our base station competitive assessment not only for its outstanding performance in innovation and implementation, but also for its high points all around in each of our categories, achieving best-in-class rank for the essential IP, advanced features, multi-protocol support and LTE RAN contracts criteria.

Ericsson achieved first in the Implementation category with the most LTE contracts and subscriber potential among the vendors from networks equipped by Ericsson.

These findings are part of ABI Research’s Macro Basestations Research Service, which includes Competitive Assessments, Research Reports, Market Data, and Insights. This new macro basestation Competitive Assessment report profiles Ericsson, Huawei, Nokia Siemens Networks, Alcatel-Lucent, Samsung, NEC, and ZTE.

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